Doorstep Taxes: What You Need to Know About Retail Delivery Fees

Doorstep taxes are becoming a hot topic in today’s economy. With the continuing rise of ecommerce, food and grocery deliveries, some states are levying additional charges on deliveries—on top of shipping, service, and gratuities. These charges are commonly referred to as doorstep taxes, delivery taxes, or retail delivery fees.

So far, two states (Colorado and Minnesota) have implemented statewide retail delivery fees, and several others are actively considering similar legislation. These fees apply to goods delivered by motor vehicle directly to a customer’s location and typically appear as a separate line item on receipts.

Understanding doorstep taxes is crucial for businesses and consumers alike, especially as states look for new revenue sources tied to modern buying behavior. In this article, we break down what doorstep taxes are, how they differ from traditional sales tax, which states have implemented them, and what businesses need to do to stay compliant.

Key Takeaways

• Doorstep taxes (also called retail delivery fees or delivery taxes) apply to goods delivered by motor vehicle directly to a consumer.
• Colorado and Minnesota currently have statewide retail delivery fees, with Colorado’s fee subject to additional complexity due to home rule cities.
• These fees are not sales tax, but they still carry compliance, collection, reporting, and remittance obligations for retailers and marketplace facilitators.
• Major delivery platforms like DoorDash and Amazon have publicly opposed these fees, stating that additional taxes on delivery orders disproportionately impact consumers and could discourage the use of delivery services.
• More states and local jurisdictions are considering similar fees, increasing the likelihood of layered delivery taxes in the future.
• Businesses selling across state lines must monitor delivery tax laws closely, as failure to comply can result in penalties, audit exposure, and frustrated customers.

Understanding Doorstep Taxes

Doorstep taxes (sometimes called delivery taxes or retail delivery fees) are government-imposed fees on goods delivered by motor vehicle to a consumer’s location. They apply regardless of whether the order is placed online, through an app, or by phone, as long as the item is delivered.

Unlike shipping charges or service fees set by businesses, doorstep taxes are statutory fees created by law. They are typically listed as a separate line item on invoices and receipts and must be remitted to the appropriate taxing authority.

The rationale behind these taxes is twofold:

1. To generate revenue from the growing volume of ecommerce and delivery-based transactions
2. To help fund infrastructure, transportation, and environmental initiatives impacted by delivery traffic

However, industry stakeholders—especially delivery platforms—argue such fees can be regressive and disproportionately affect low-income consumers who rely on delivery for essentials.

How Doorstep Taxes Differ from Traditional Sales Tax

Doorstep taxes are fundamentally different from traditional sales tax, and those differences matter for compliance.

Sales tax is imposed on the sale of taxable goods or services and is calculated as a percentage of the sales price. Doorstep taxes, by contrast, apply specifically to the delivery component of a transaction and are charged at a flat, per-transaction rate, regardless of the order total.

For example:

• The Minnesota retail delivery fee is $0.50 per transaction.
• The Colorado retail delivery fee is currently $0.28 per transaction, though local home rule jurisdictions may administer or modify collection requirements.

As delivery volume increases, so does the relevance and enforcement of these taxes.

Key Differences

• Scope: Doorstep taxes apply only to retail goods delivered by motor vehicle. Sales taxes apply to most retail transactions, whether delivered or purchased in person.
• Calculation: Doorstep taxes are charged at a fixed amount per transaction. Sales taxes are calculated as a percentage and vary by jurisdiction.
• Purpose: Doorstep taxes are designed to capture delivery-related economic activity. Sales taxes fund broader government operations.

States That Have Implemented Doorstep Taxes

Colorado Retail Delivery Fee

Colorado implemented its retail delivery fee in 2022. The fee applies to each retail sale delivered by motor vehicle to a Colorado location when the transaction includes at least one taxable item.

Key factors include:

• The $0.28 fee is imposed per transaction, not per item.
• Businesses must file retail delivery fee returns in addition to sales tax returns.
• Home rule cities may self-collect, creating additional administrative complexity for sellers operating statewide.

Minnesota Retail Delivery Fee

Minnesota’s retail delivery fee took effect in 2024 and applies to deliveries of taxable retail goods by motor vehicle.

Key factors include:

• $0.50 per-transaction fee applies to deliveries with a total retail value of $100 or more
• Retailers with less than $1 million in Minnesota retail sales in the previous calendar year are not required to collect the retail delivery fee
• Certain items are exempt, including most food and select baby products

States and Cities Considering Delivery Taxes

Several jurisdictions have proposed similar delivery-based taxes or fees, including:

• Hawaii, which has considered a $0.50 delivery fee
• Mississippi, which has proposed a $0.30 fee
• Chicago, Illinois, which has explored a $1.25 per-package ground delivery tax

As states look for new revenue streams tied to modern consumer behavior, delivery taxes are increasingly part of the conversation.

Delivery Platforms and Opposition to Doorstep Taxes

Major delivery platforms including DoorDash, Amazon, Grubhub, and Instacart have openly opposed delivery taxes and similar government-imposed delivery fees.

Their primary arguments include:

• Higher consumer costs: Platforms argue that delivery taxes add yet another charge to already expensive delivery orders, potentially discouraging usage.
• Disproportionate impact: Industry groups contend that delivery taxes are regressive, affecting lower-income households, elderly consumers, and individuals with limited mobility who rely on delivery services.
• Reduced order volume: Platforms warn that increased fees could lower demand, negatively impacting restaurants, retailers, and gig-economy workers.

In response, several delivery companies and trade groups have supported lobbying campaigns and public awareness efforts aimed at blocking or rolling back proposed delivery taxes.

The Impact of Delivery Taxes on Businesses and Consumers

Businesses that sell through marketplace facilitators may feel somewhat insulated from doorstep taxes, since facilitator platforms should handle collection and remittance. However, for brick-and-mortar retailers, restaurants, and online sellers operating across multiple states, these fees introduce yet another layer of complexity to an already challenging tax landscape.

Flat, statewide retail delivery fees can be relatively manageable on their own. The real challenge arises if local jurisdictions begin layering their own delivery fees on top of existing local sales tax rates. That kind of stacking can quickly increase administrative burden, compliance risk, and overall operating costs.

From the consumer’s perspective, doorstep taxes may show up as an unexpected line item on a receipt. Most shoppers aren’t tracking changes in tax law—understandably so—which means additional fees can lead to frustration, hesitation at checkout, or reduced order frequency. In some cases, that reaction could undercut the very revenue gains states are hoping to achieve.

As doorstep taxes continue to expand and evolve, businesses will need thoughtful strategies and support to manage compliance, control costs, and minimize disruption.

We Can Help You Stay Compliant

If you’re feeling overwhelmed by constantly changing tax laws, retail delivery fees, and multi-state compliance requirements, you’re not alone.

SalesTaxSolutions.US helps businesses manage sales tax, retail delivery fees, and evolving compliance obligations—from registration and collection to filing, monitoring, and audit defense—so you stay compliant without sacrificing growth.

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Strategies for Managing Doorstep Taxes Effectively

To manage doorstep taxes effectively, businesses should:

• Use tax automation tools that can account for retail delivery fees
• Review marketplace facilitator agreements carefully
• Train internal teams on evolving delivery tax requirements
• Partner with sales tax professionals who track legislative changes

Proactive planning can reduce risk and prevent costly compliance mistakes.

Future Trends and Considerations

Doorstep taxes are continuing to evolve alongside broader economic and consumer trends. As ecommerce and on-demand delivery become even more embedded in everyday purchasing, more states (and potentially local jurisdictions) are likely to explore retail delivery fees as an additional revenue source. Staying on top of these developments is essential for anticipating compliance changes before they become costly problems.

Technology will also play a growing role in how delivery taxes are administered and enforced. States are increasingly relying on automated systems to improve accuracy, streamline reporting, and enhance transparency. While this can simplify compliance in some ways, it also means less room for error and greater visibility into businesses’ filing and payment practices.

What Businesses Should Watch Going Forward

• Ecommerce growth: Continued growth in online and delivery sales is a major driver behind new delivery tax proposals.
• Tax automation trends: More automated tax systems mean faster processing and faster detection of noncompliance.
• Legislative and policy changes: New laws, expanded definitions, and local-level fees can shift obligations quickly.
• Opposition: Continued opposition and legal challenges from delivery platforms could tip the scales on doorstep taxes in the future.

By staying proactive and informed, businesses can navigate the evolving landscape of doorstep taxes with confidence.